Tuesday, 21 October 2014

According to Aditya Chakrabortty, the government pays out £85bn a year in tax breaks and subsidies to business.

Kevin Farnsworth, a senior lecturer in social policy at the University of York, has spent the best part of a decade studying corporate welfare – delving through Whitehall spreadsheets and others, and poring over Companies House filings. He’s just produced what is, as far as I know, the first ever comprehensive audit of the British corporate welfare state.

The figures, to be published in a forthcoming report, are astonishing. Farnsworth takes the financial year 2011-12 and tots up the subsidies and grants paid directly to businesses. They amount to over £14bn – that is, almost three times the £5bn paid out that year in income-based jobseeker’s allowance.

Add to that the corporate tax benefits, the value of the cheap credit made available to banks and other business, the insurance schemes run by the government to protect exporters, the marketing for British business laid on by Vince Cable’s ministry, the public procurement from the private sector … Farnsworth calculates that direct corporate welfare costs British taxpayers just shy of £85bn a year.

Nor does this figure include the cost of bailing out the banks or the millions in housing benefit that goes straight into the pockets of private landlords.

The bill for corporate welfare is huge – and largely hidden. We know a lot about the people who claim social welfare: we know how much each benefit costs the public, the government sets strict rules for eligibility – and we even have detailed estimates for how much cheating goes on. Between them, Whitehall, academia and NGOs have churned out enough surveys on social welfare claimants to fill a wing of the Bodleian library. But corporate welfare? The government has itself acknowledged: “There is no definitive source of data about spending on subsidies to businesses in the UK.” The numbers are scattered across government publications and there is not even any agreement on what counts as a corporate handout.

Whilst some of this is bribes to companies like Disney to spend money here rather than elsewhere and can be shown to actually be revenue-positive, much of it goes to recipients like the "defence" industry, a sector of commerce so heavily subsidised that we would actually be better off without it.

Mainly, however, it shows up the Tories' harrying of the poor for the cynical vote-chasing exercise it really is. If they were really interested in reducing public spending, this would be a good place to start.

9
comments:

For business to remain, there must be what they would see as advantages.

The socialist mind can't see this. It sees only that someone has money - oh quick, must steal it for ourselves.

Investment is something attracted, not ordered by the politburo. Essentially, what the govt is saying is - look, our taxes and regulations are low enough, few enough, we want your investment, as long as it produces jobs.

This is where growth comes from, not from some govt demand that it happens.

Point of information. I was invited to a round table meeting with the local Chamber of Commerce just shortly after the 2010 election. The speaker made a great play as to how the new government was now going to hand out lots of dosh to areas it deemed to need such largesse. I got quite cross and told that it was just this this which in part had got us into this mess. I wasn't popular. Really, what can you do....?

JH, sure some of the bungs are revenue-positive, i.e. they attract businesses that, ultimately, end up paying more in tax than they received in the bung, but many are not.

Also, I agree with you about the socialists. The Grauniad article was full of mentions of companies recieving more in bungs that the government got back in corporation tax, as if CT was the only tax companies paid.

As Lola points out, it doesn't matter who is currently crewing the Ship of Fools, we still get the worst of both worlds, public money being given to business and socialist meddling in businees affairs.

@"Mainly, however, it shows up the Tories' harrying of the poor for the cynical vote-chasing exercise it really is"People who were getting over £25k p.a. in benefits were not poor.I was taking home that from my job in 2010 (after travel costs) and I didn't think that I was poor.